Definition
Itemized deductions are specific expenses you can subtract from AGI instead of taking the standard deduction.
How It Works
Common items include mortgage interest, state and local taxes up to the SALT cap, charitable contributions, and certain medical expenses above a threshold. You itemize when the total exceeds the standard deduction.
Example
A homeowner with large mortgage interest and charitable gifts itemizes because the total beats the standard deduction.
When It Works Best
Itemizing pays off for those with high deductible expenses, particularly when bunching charitable gifts into one year.
Who It Applies To
Taxpayers whose deductible expenses exceed the standard deduction.
Watch-Outs
The SALT cap limits the state and local tax portion, which has reduced the benefit of itemizing for many high earners in high-tax states.
